South Dakota's unemployment insurance fund regains stability

State's system was basically drained during Great Recession

October 13, 2011|BY BOB MERCER | American News Correspondent

PIERRE — State Labor Department officials said Wednesday that South Dakota’s unemployment insurance fund is gradually regaining its financial strength after being completely deleted during the recent recession.

The state fund was emptied and a federal loan was required to keep benefits flowing to jobless workers during the depths of the economy’s 2009-10 difficulties. State jobless claims for the last week of September rose from 1,023 in 2008 to 3,356 in 2009 and 2,131 in 2010. This September, they were down to 1,613.

A combination of rate increases for employers and less demand for benefits has helped the unemployment insurance fund return to financial stability. Pauline Heier, director for the state unemployment insurance division, delivered a forecast showing the fund will receive $48.2 million in employer contributions and interest earnings for 2011 while benefits are expected to cost about $42.4 million.

Heier said the fund should end the year with about $33.1 million in reserve. Her preliminary forecast for 2012 shows $49.4 million from contributions and interest, while benefits to jobless workers will cost $41 million. She projected a balance at the end of 2012 of $41.5 million.

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Heier presented her data to the state Unemployment Insurance Advisory Council, a group created under state law to help guide the unemployment insurance system. She said the fund appears on track to eventually grow to the $76 million balance that the council decided should be the target for weathering another recession as bad as 2009-10.

Labor Secretary Pam Roberts said the program is “normalizing” again with revenue somewhat exceeding payouts. “We’re trending right, right on track, so that’s good news,” Roberts said.

As one step to get through, surcharges were levied on employers regardless of their experience ratings for layoffs. Higher rates were also charged, and the amount of wages on which the tax rates apply is gradually increasing each year to slowly produce more revenue.

Another comment from Roberts summarized the strain of the past few years.